The U.S. has enjoyed 10 years of a
booming stock market and a growing economy. It’s too early to tell how 2020 will
look, but there are some signs that it doesn’t look quite as promising. Between
warnings of a possible economic pullback and a contentious presidential
election year, investors may want to consider financial moves designed to help protect
gains and optimize future opportunities.
For example, while domestic
securities were global leaders in 2019, Morgan Stanley believes U.S. stocks and
bonds will underperform other developed countries in 2020. The wealth manager
predicts the S&P 500 Index will have a small decline to 3,000 points by the
end of the year as the dollar weakens, corporate earnings edge downward and “unique”
political risks are expected in the run-up to Election Day.1
We recommend that individuals take a long view when it comes
to investing, particularly in relation to retirement planning. However, as we
approach this new decade, it may be important to review your portfolio’s
overall asset allocation, not just within the context of 2020, but for your
long-term financial objectives. Please give us a call if we can help you make
As for retirement planning, be aware of three changes scheduled to impact
Social Security benefits in 2020: 2
- The earnings limit subject to FICA payroll taxes is
scheduled to increase by $4,800, to $137,700. This means employees who earn at
or above that threshold will pay an additional $367 in payroll taxes during
- Retirees received a 1.6 percent boost in Social
Security benefits, which translates to roughly $288 (on average) more for the
- Social Security recipients who haven’t reached full
retirement age can earn $600 more in 2020 without a benefits reduction — up to
$18,240. Beyond that limit, every $2 in earnings will result in $1 withheld in
It’s a good idea to consider your income tax status early in
the year. A lot of people did not expect the Tax Cuts and Jobs Act to
negatively impact their taxes and received an unpleasant surprise when they
filed returns last year. You can help prevent having to owe additional taxes on
filing day by adjusting your Form W-4 exemptions with your employer so that
more income is withheld throughout the year.3
Also consider making your 2020 contributions to
tax-advantaged accounts as early in the year as you can. That’s because any
contributions you make to accounts such as IRAs, 529s and workplace retirement
plans will have more time to take advantage of tax-deferred compounding growth.4
Content prepared by Kara Stefan
1 Joanna Ossinger. Bloomberg. Nov. 17, 2019. “Morgan
Stanley Sees U.S. as a Laggard in 2020 Across Markets.” https://www.bloomberg.com/news/articles/2019-11-18/morgan-stanley-sees-u-s-underperforming-in-2020-across-markets. Accessed Dec. 18, 2019.
2 Kenneth Terrell. Oct. 28, 2019. “What to Know About
Social Security Changes for 2020.” https://www.aarp.org/retirement/social-security/info-2019/social-security-changes-look-ahead.html. Accessed Jan. 15, 2020.
3 Kiplinger. Oct. 29, 2019. “27 Money Moves to Make Now
to Prepare for 2020.” https://www.kiplinger.com/slideshow/saving/T023-S002-money-moves-to-make-now-to-prepare-for-2020/index.html. Accessed Dec. 18, 2019.
4 Business Wire. Dec. 16, 2019. “20 Financial
Resolutions for 2020 from the AICPA.” https://www.businesswire.com/news/home/20191216005073/en/20-Financial-Resolutions-2020-AICPA. Accessed Dec. 18, 2019.
Our firm is not affiliated with or endorsed by the U.S.
government or any governmental agency and does not provide tax advice.
We are an independent firm helping individuals create
retirement strategies using a variety of insurance and investment products to
custom suit their needs and objectives. This material is intended to provide
general information to help you understand basic financial planning strategies
and should not be construed as financial or investment advice. All investments
are subject to risk including the potential loss of principal. No investment
strategy can guarantee a profit or protect against loss in periods of declining
The information contained in this material is believed to be
reliable, but accuracy and completeness cannot be guaranteed; it is not intended
to be used as the sole basis for financial decisions. If you are unable to
access any of the news articles and sources through the links provided in this
text, please contact us to request a copy of the desired reference.
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